Saving for Future College Costs

March 01, 2017

Now that you are actively pursuing your education, you might be interested in learning about how you can save for future education—yours, your children`s, or your grandchildren`s.

529 college savings accounts are a good way to save specifically for college. They are investment accounts like a retirement fund, except that the beneficiary can be a child or grandchild—or yourself if you think you will go back to school for more education. In most states, contributions to these accounts are tax-deductible as long as the account is linked to that state's 529 plan.

Four states—Arizona, Kansas, Maine, and Pennsylvania—grant tax credits for investments in any state`s 529 plan. If you live in one of these states, you should compare the options available to you.

Many plans also offer an age-based investment strategies that start out aggressive while the child is young, and shifts to more conservative investments as he or she approaches college age. Some states also offer prepaid college savings plans that allow parents to lock in to current tuition costs.